What is An off-plan Property in Dubai ?

What is An off-plan Property in Dubai ?

02.01.2022 (updated 01.20.2023)

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  • What is An off-plan Property in Dubai ?

Off-plan property is the term used for real estate before its construction is completed. Purchasing off-plan real estate is purchasing property before it is commissioned, most often in the early construction stages or even in the project phase. In this article, we will consider the pros and cons of investing in off-plan real estate.

In 2021, 84,196 real estate deals worth almost AED 300 billion ($81.6 billion) took place in Dubai. Of the total, 40.4% were for properties under construction.


The Off-plan Real Estate Market and Its Advantages

Investing in off-plan real estate has several advantages:

  1. High profitability. Pre-launch and off-plan real estate is cheaper than completed property. If the property is resold after construction, you can earn a high profit of up to 20%.
  2. Security. According to local laws, the investor keeps money in escrow accounts opened specifically for the project. The developer submits estimates to the Dubai Land Department for each construction stage and receives access to the money for the next stage only after the previous construction stage is completed. If the developer cannot finish the work, the state opens a tender and transfers the money to another company to complete the construction.
  3. Interest-free installments with a convenient payment schedule. Initial payment starts from 5%.
  4. The transaction can be remote. It is not necessary to have a bank account in the UAE to make payments.

Possible Risks of Buying Off-plan Property in Dubai

Thanks to stable economic development and efforts from authorities, risks in the off-plan sector in Dubai have been minimized. However, they do exist:

  1. Real estate cannot be resold before a certain percentage of the total amount is paid. A sale and purchase agreement (SPA) contains this percentage. As a rule, it is 20-40%.
  2. property in Dubai

The Current State of the Dubai Real Estate Market

The performance of the Dubai real estate market grew during 2021 and early 2022 on the back of the following factors:

  • Increased interest from foreign buyers thanks to Expo 2020;
  • Relaxation of resident visa requirements for investors, businesses, and other categories of applicants;
  • Effective containment of the spread of COVID-19 in the UAE;
  • Detailed plans for the construction and improvement of Dubai until 2040 (Urban Master Plan 2040).

Dubai is becoming one of the most attractive places to live and do business. Ian Goldin, Professor of Globalisation and Development at Oxford University, believes that increasing numbers of people will move to Dubai, positively influencing the real estate market, especially the market of off-plan property. “We are observing a market return to pre-pandemic levels and that growth will continue,” he says.

So, the figures for January 2022 were the best in the history of monitoring the real estate market in the emirate. The Land Department has registered 5,797 contracts of sale totaling 16.69 billion AED ($ 4.55 billion). Compared to last January’s figures, the number of transactions increased by 74.5% and their value increased by 145.3%. In February, the results were also impressive, as the number of real estate purchases increased by 71.2% compared to February 2021, and their total value, by 125%.

Differences Between Off-plan and Pre-launch Investments

The Official Launch is the official start of sales. Pre-launch is the initial stage of the project with the possibility to book a property. In this case, there is no pit in the area for construction and developers only provide potential buyers with 3D renders.

In such cases, there is a deposit and a document of expression of interest (EOI). Some developers call this pre-registration.

When sales officially begin, the investor signs a standard purchase and sale agreement for the primary market (SPA).

We will help you buy real estate in Dubai

AX CAPITAL, a real estate agency in Dubai, will assist you to purchase property in the UAE. We support investors before, during, and after a transaction. We will help you select real estate in Dubai with an above-average yield.

AX CAPITAL has been working in the Dubai real estate market for more than 4 years, has a good relationship with the developers, and can provide its clients with specialised conditions for real estate purchases. Contact our specialists for a consultation and comparative analysis of market offers.

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